Which of the Following Statements Is Correct with Regards to Diversification

question 77

Multiple Choice

Which of the following statements is correct with regards to diversification?

• A)Diversifying reduces the return of the portfolio.
• B)Diversifying reduces the market risk of the portfolio.
• C)Diversifying reduces the dollar return of the portfolio.
• D)None of these statements is correct.

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Definitions:

Competitive Exclusion

Process whereby two species compete for a limiting resource, and one drives the other to local extinction.

Same Niche

The scenario where two or more species occupy the same environmental niche, competing for identical resources.

Larger Species

Species characterized by larger body sizes in comparison to related species or within a defined context of study.

Survival

The ability to continue living or existing, often despite difficult conditions or situations.